Category: Stock Market

There aren’t many S&P/ASX 200 Index (ASX: XJO) stocks that have done as well as Goodman Group (ASX: GMG) in the last year, with a rise of around 70%. Greg Goodman has chosen this point in time to transact a large sale of Goodman shares.

Greg Goodman is the current CEO and co-founder of the property giant.

When a member of the leadership team decides to sell shares, it can be a worrying sign. Let’s examine the sale and then consider whether it’s actually concerning.

Goodman share sale

Greg Goodman has a beneficial interest in the JSH Family Trust, which is the entity that sold shares.

This family trust owned 1.95 million Goodman shares before the sale and sold 1 million Goodman shares on 15 May 2024, according to the ASX announcement.

The sale raised $33.336 million, suggesting the average price per share was approximately $33.34.

Is this a worrying sign for the ASX 200 stock?

The last time Greg Goodman sold shares was in mid-September 2023 when he sold around $20 million of shares. Since then, the Goodman share price has gone up around 50%, so the just-announced sale does not mean an impending decline is certain to occur.

The co-founder still has an enormous amount of wealth tied to the ASX 200 stock. Greg Goodman has an indirect holding of 37.9 million Goodman shares, which is worth around $1.3 billion – he still has a lot of skin in the game.

Plus, Greg Goodman owns 4.3 million performance rights. He is incentivised to help the business succeed.

The FY24 third-quarter update showed ongoing success for the business, with expectations for its operating earnings per security (EPS) growth upgraded to 13%.

Goodman Group’s total portfolio is now worth $80.5 billion, with a $12.9 billion development work in progress (WIP) pipeline. It completed $0.8 billion of developments in the latest quarter, with 96% of year-to-date completions committed (by tenants). Data centres under construction currently represent approximately 40% of WIP.

The rental performance remains commendable across Goodman’s partnerships, with an 98% occupancy rate and net property income like-for-like growth of 4.9%.

Goodman share price snapshot

Since the start of 2024, the ASX 200 stock has risen 36% (as seen on the chart below), compared to a rise of just 3% for the ASX 200.

The Goodman share price is up 0.5% today amid news of this sale.

The post Guess which ASX 200 co-founder just sold $33 million worth of company shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goodman Group. The Motley Fool Australia has recommended Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) is having a subdued session and is on course to record a small decline. In afternoon trade, the benchmark index is down 0.1% to 7,856.4 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Infratil Ltd (ASX: IFT)

The Infratil share price is down 5% to $9.80. Investors have been hitting the sell button today after the New Zealand infrastructure business released its full year results. This was despite the company reporting a 63% jump in proportionate EBITDA to NZ$864 million, which was above the top end of its revised guidance range. Though, it is worth noting that a substantial portion of this EBITDA increase can be attributed to the higher ownership stake in One NZ since June 2023. After adjusting for this change, EBITDA growth stood at 15.5% in FY 2024.

James Hardie Industries plc (ASX: JHX)

The James Hardie share price is down over 11% to $48.42. This has been driven by the release of the fourth quarter and full year update from the building materials company. James Hardie achieved record fourth quarter sales of US$1,004.9 million and record full year sales of US$3,936.3 million. However, despite this strong top line performance, it appears that the company’s earnings still fell short of expectations for the fourth quarter. In addition, its guidance for FY 2025 was well below the consensus estimate.

Sonic Healthcare Ltd (ASX: SHL)

The Sonic Healthcare share price is down 6% to $25.01. Investors have been selling this pathology company’s shares after it downgraded its guidance for FY 2024. It now expects FY 2024 EBITDA of approximately $1.6 billion on revenues of approximately $8.9 billion. The former is short of its guidance range of $1.7 billion to $1.8 billion. Management advised that this is due to inflationary pressures on the business. This is being exacerbated by currency exchange headwinds.

Star Entertainment Group Ltd (ASX: SGR)

The Star Entertainment share price is down 8% to 49.7 cents. This has been driven by news that a rumoured suitor, Hard Rock Hotels and Casinos, has denied that it is interested in acquiring the troubled casino and resorts operator. Hard Rock wasn’t happy to learn of the media speculation. It said: “Any misuse of the Hard Rock name in unauthorised business dealings is taken very seriously. We are currently investigating this matter and will pursue all necessary legal actions to protect our brand and reputation.”

The post Why Infratil, James Hardie, Sonic Healthcare, and Star Entertainment shares are sinking today appeared first on The Motley Fool Australia.

More reading

• Which ASX 200 stock just plunged 12% despite record full-year earnings?
• Why this ASX 200 healthcare stock is tumbling 6% today
• 3 ASX 300 shares hitting new 52-week lows: Are they cheap buys?
• Star Entertainment share price dives 10% on Hard Rock update
• Here are the top 10 ASX 200 shares today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX 200 stock James Hardie Industries plc (ASX: JHX) is the worst performer of the S&P/ASX 200 Index (ASX: XJO) today after the building materials company released its FY24 4Q and full-year results.

Despite reporting record net sales and record adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) for the 12 months to 31 March, investors are punishing the ASX 200 stock today.

The James Hardie share price hit an intraday low of $48.22 this morning, down 11.95% on yesterday’s close. The ASX 200 stock is currently swapping hands for $49.20, down 10.17%.

Let’s review the numbers.

ASX 200 materials stock plunges on full-year numbers

Here are the highlights of the full year ending 31 March: 

• Record net sales of US$3,936.3 million, up 4% on the prior corresponding period (pcp) of FY23
• Record adjusted EBITDA of US$1,125.8 million
• Adjusted EBITDA margin of 28.6%
• Record adjusted EBIT of US$940.8 million
• Adjusted EBIT margin of 23.9%
• Record adjusted net income of US$707.5 million, up 17%
• Adjusted diluted earnings per share (EPS) of US$1.61 per share, up 18%
• Record full year operating cash flow of US$914.2 million, up 50%  

Here are the highlights of 4Q FY24: 

• Record net sales of US$1,004.9 million, up 9% on the prior corresponding period (pcp) of Q4 FY23
• Adjusted EBITDA of US$280.8 million
• Adjusted EBITDA margin of 27.9%
• Adjusted EBIT of US$232.5 million
• Adjusted EBIT margin of 23.1%
• Adjusted net income of US$174.2 million, up 19%

The company said it plans to continue repurchasing shares under its US$250 million share buyback program instead of paying dividends.

In Q4, James Hardie bought back 1.9 million shares at an average price of US$39.42, costing approximately US$75 million.

What did management say? 

James Hardie CEO Aaron Erter said:

Our team’s focus remains simple: working safely, partnering with our customers, managing decisively, and controlling what we can control.

This focus has enabled us to deliver a strong fourth quarter and fiscal year for Adjusted Net Income.

Erter added that the FY24 results were “proof points” that the company was taking new market share.

He added:

We have a superior value proposition that helps our customers grow profitably and be successful.

Our team is focused on maintaining momentum and consistency to deliver strong financial results again in fiscal year 2025 as highlighted by our guidance range provided today.

What’s next?

James Hardie said the outlook for its housing markets “continues to remain uncertain”.

It expects its total addressable market in North America to decline by 2%. The company said it intended to outperform the market by growing the business and investing for long-term gains.

The guidance for FY25 is as follows:

• North American volumes to be in the range of 2,950 million to 3,150 million standard feet vs. 3,054 million standard feet in FY24
• North American EBIT margin in the range of 29% to 31%
• Adjusted net interest of US$25 million to US$29 million vs. US$24.3 million in FY24
• Adjusted effective tax rate of between 23.5% and 24.5% vs. 23% in FY24
• Adjusted net income in the range of US$630 million to US$700 million
• Capital expenditures of US$500 million to US$550 million

Broker says FY25 guidance ‘disappointing’

UBS analyst Lee Power says James Hardie’s FY25 earnings guidance is “disappointing”.

The broker currently has a buy rating on the ASX 200 stock and a 12-month price target of $66.50.

In The Australian today, Power said the midpoint of James Hardie’s FY25 net profit guidance range at US$665 million is 13% below the consensus expectations of $US762 million.

Power said:

The FY25 outlook is disappointing and while North American FY25 margin guidance of 29-31 per cent is broadly in line with UBS expectations, volumes are significantly below expectations.

FY25 volumes were 6 per cent below consensus, according to Power.

He noted the upper end of the FY25 NPAT guidance was eight percent below his estimates.

ASX 200 stock price snapshot 

James Hardie shares are down 13.5% in the year to date. By comparison, the ASX 200 is up 2.9%. 

The post Which ASX 200 stock just plunged 12% despite record full-year earnings? appeared first on The Motley Fool Australia.

More reading

• Why Infratil, James Hardie, Sonic Healthcare, and Star Entertainment shares are sinking today
• Leading brokers name 3 ASX shares to buy today
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is out of form and on course to record a small decline. At the time of writing, the benchmark index is down 0.25% to 7,843.8 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are rising:

ALS Ltd (ASX: ALQ)

The ALS share price is up 5% to $14.47. This has been driven by the release of the testing services company’s FY 2024 results this morning. ALS reported a 6.8% increase in revenue to $2,586 million and modest 0.2% increase in underlying EBIT to $491.8 million. The company’s CEO and managing director, Malcolm Deane, commented: “The Group has continued to deliver revenue growth and maintain industry-leading margins despite challenging market conditions.”

OFX Group (ASX: OFX)

The OFX Group share price is up almost 13% to $1.91. This has also been driven by the release of full year results this morning. Investors have responded positively to the foreign exchange company reporting a 6.3% increase in net operating income to $227.5 million and a 3.4% lift in underlying EBITDA to $64.6 million. This was in line with its guidance. CEO Skander Malcolm said: “Despite a tougher macroeconomic backdrop in our two largest markets, it was pleasing to deliver NOI and underlying EBITDA in line with guidance. Without the near-term impact of Paytron on our earnings, we would have delivered positive operating leverage.”

Skycity Entertainment Group Ltd (ASX: SKC)

The Skycity Entertainment share price is up 4% to $1.62. This follows news that Skycity has reached an agreement with the Department of Internal Affairs in New Zealand to settle its anti-money laundering and countering financing of terrorism proceedings. According to the release, the settlement includes an admission of guilt and a penalty of approximately NZ$4 million.

TechnologyOne Ltd (ASX: TNE)

The TechnologyOne share price is up 5% to $16.84. Investors have been buying this enterprise software provider’s shares following the release of its half year results. The company reported a 16% increase in revenue to $244.8 million, a 21% lift in annual recurring revenue (ARR) to $4423.6 million, and a 17% jump in profit before tax to $61.5 million. Management remains confident on the future and believes it is on track to surpass its ARR target by FY 2025. CEO Ed Chung said: “We are on track to surpass total ARR of $500m+ by FY25, from our current base of $424m. We will continue to invest for the long-term in R&D to build platforms for growth to continue to double in size every 5 years.”

The post Why ALS, OFX, Skycity, and TechnologyOne shares are surging today appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Technology One. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Technology One. The Motley Fool Australia has recommended Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Qantas Airways Ltd (ASX: QAN) shares are racing ahead of the benchmark today.

Shares in the S&P/ASX 200 Index (ASX: XJO) airline stock closed yesterday trading for $6.07. In early afternoon trade on Tuesday, shares are swapping hands for $6.22 apiece, up 2.5%.

For some context, the ASX 200 is down 0.3% at this same time.

Here’s what’s happening.

ASX 200 airline flying high amid resurgent travel

Without any fresh price sensitive news today, it looks like Qantas shares could be catching some tailwinds from the latest ‘Domestic Airline Competition in Australia’ report.

The report, released by the Australian Competition & Consumer Commission (ACCC) earlier today, revealed that the Australian aviation sector appears to have fully recovered from the COVID-19 pandemic.

As you likely recall, pandemic travel restrictions saw Qantas shares collapse by 63% in early 2020. The ASX 200 airline stock has soared 168% since those March 2020 lows.

Today the ACCC revealed that Australia’s major airlines (Bonza, Jetstar, Qantas, Rex and Virgin Australia) carried 4.9 million domestic passengers in March. This is just 1.2% below the same air travel numbers from March 2019.

The report also noted that Australia’s major airlines flew roughly 6.2 million seats in March. This is also just below the seat capacity recorded in March 2019.

Commenting on the return to pre-pandemic air travel, ACCC commissioner Anna Brakey said, “After four years of instability, the domestic airline industry has returned to more typical seasonal levels that were last seen before the pandemic.”

Brakey noted that domestic ticket prices have been trending lower:

The increase to airline seat capacity has contributed to lower airfares for consumers on domestic routes. We hope to see this trend continue as the airline industry returns to a more stable market.

Also potentially boosting Qantas shares is that March’s strong travel figures come on the heels of an even stronger February report. In February, domestic passenger numbers exceeded 2019 levels for the first time since the pandemic.

The ACCC pointed to several “major entertainment events” in Australia in February that helped drive air travel demand.

“Most notably, this included Taylor Swift’s concert tour in Melbourne and Sydney, as well as a World Wrestling Entertainment event in Perth,” the report stated.

On the service front, the ACCC noted, “Service reliability has improved in recent months despite remaining worse than the long-term industry average.”

March 2024 saw Australia’s major airlines cancel 2.8% of flights. That’s down from 5.0% of flights that were cancelled in December.

How have Qantas shares been tracking?

Qantas shares are down 5% since this time last year.

But the recent trend has been upwards, with the ASX 200 airline stock gaining 16% over the past six months.

The post Is this why Qantas shares are racing ahead of the ASX 200 on Tuesday? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It’s a day of reckoning for one ASX 200 healthcare stock. The release of an earnings update appears to have caught investors of this medical diagnostic company off guard today.

The Sonic Healthcare Ltd (ASX: SHL) share price is being eviscerated, falling 6.1% to $25.00 in afternoon trade. More than $90 million worth of shares have traded hands as shareholders decide to bounce out of the stock following the disappointing update.

Only one other company in the S&P/ASX 200 Index (ASX: XJO) is faring worse than Sonic today. Sonic’s sheer size and large fall mean the ASX healthcare sector is the second-worst performing sector, trailing behind communication services amid Telstra’s job cut plans.

Inflation and currencies cut into earnings

With two months left of the full year, Sonic had to come clean on how the final numbers were shaping up.

Previously, the pathology, radiology, and laboratory business had guided earnings before interest, taxes, depreciation, and amortisation (EBITDA) of A$1.7 million to A$1.8 billion for FY24. On its own admission, the lower bound looked more likely at the time.

Today, the Sullivan Nicolaides owner now expects even less. The new full-year guidance is for A$1.6 billion in EBITDA on revenues of $8.9 billion.

The earnings growth of this ASX 200 healthcare stock has underperformed management’s expectations. Inflationary pressures, unfavourable currency exchange rates, and delayed margin improvement initiatives have taken their toll in the second half.

Sonic Healthcare CEO Dr Colin Goldschmidt expanded on the situation leading to today’s revision, stating:

The 2024 financial year has been one of transition for Sonic Healthcare, moving away from pandemic conditions into a more normal business environment. Our current robust topline growth, organic and non-organic, in a setting of inflationary cost pressures, have combined to delay the completion of our programs to align labour costs more closely with post-pandemic conditions. These unique business conditions have also made forecasting our earnings unusually difficult this year.

Meanwhile, with the belief much of the headwinds will taper in FY25, Sonic guided for A$1.7 billion to A$1.75 billion in EBITDA for the next financial year. This would represent a 7.8% increase from FY24 at the midpoint.

Is this ASX healthcare stock a buy?

Before today’s update, Sonic Healthcare shares were being touted as a buy by some analysts.

For example, the Morgans team held a $34.94 price target on the ASX 200 healthcare stock based on ‘near/medium term drivers supporting underlying profitability’. Toby Grimm of Baker Young labelled Sonic a hold while believing FY2024 could be the bottom for earnings.

The Sonic Healthcare share price is now down 31% over the past year. Shares in the company are trading at a trailing price-to-earnings (P/E) ratio of 23 times. This is in line with the average for the global healthcare industry.

The post Why this ASX 200 healthcare stock is tumbling 6% today appeared first on The Motley Fool Australia.

More reading

• 3 ASX 300 shares hitting new 52-week lows: Are they cheap buys?
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Motley Fool contributor Mitchell Lawler has positions in Sonic Healthcare. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Australian share market may be trading near its record high but that hasn’t stopped some ASX 300 shares from hitting new 52-week lows.

Three such shares that have made these unwelcome milestones are listed below. Is this recent weakness a buying opportunity for investors or should investors keep their powder dry? Let’s find out.

Australian Clinical Labs Ltd (ASX: ACL)

The Australian Clinical Labs share price hit a 52-week low of $2.24 this morning. This was driven by the release of a trading update from the struggling pathology services provider.

That update reveals that management continues to expect to achieve underlying EBIT at the low end of its $60 million to $65 million guidance range. This is based on unaudited management accounts to 30 April and assumes market volumes continue at current trends.

Ord Minnett is likely to see this as a buying opportunity. A recent note reveals that its analysts have an accumulate rating and $3.50 price target on the ASX 300 share.

Sonic Healthcare Ltd (ASX: SHL)

Another ASX 300 share hitting a new 52-week low on Tuesday has been fellow pathology provider Sonic Healthcare. Its shares sank to $23.58 after investors reacted badly to the release of an earnings update.

Management advised that it is now forecasting FY 2024 EBITDA of approximately $1.6 billion on revenues of approximately $8.9 billion. The former is short of its guidance range of $1.7 billion to $1.8 billion. This is due to inflationary pressures on the business, and exacerbated by currency exchange headwinds.

Looking ahead, Sonic expects to return to growth in FY 2025 and has pencilled in EBITDA of $1.7 billion to $1.75 billion for the 12 months.

Morgans is likely to see this weakness as an opportunity for investors. It currently has an add rating and $34.94 price target on its shares. Though, this recommendation could change once it has updated its financial model.

Telstra Group Ltd (ASX: TLS)

The Telstra share price dropped to a 52-week low of $3.57 after the telco released an update on its guidance.

Telstra has reaffirmed its guidance for FY 2024 and introduced its guidance for FY 2025. The latter sees the ASX 300 share target underlying EBITDA of $8.4 billion to $8.7 billion. This is up from its FY 2024 guidance of $8.2 billion to $8.3 billion. A key driver of its growth will be a $350 million cost reduction.

Goldman Sachs has responded to the update. While it was disappointed with the FY 2025 guidance, it has retained its buy rating and $4.55 price target on Telstra’s shares for the time being.

The post 3 ASX 300 shares hitting new 52-week lows: Are they cheap buys? appeared first on The Motley Fool Australia.

More reading

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• Should you buy Telstra stock on a pullback?
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Top broker Goldman Sachs has a sell rating on three popular ASX retail shares amid today’s high interest rates, weak retail sales, and the most protracted period of negative consumer sentiment in 30 years.

In a recent note, Goldman analysts Lisa Deng and James Leigh said there is “better value” in ASX consumer staples than discretionary shares right now.

They noted that several ASX discretionary retail shares were trading at elevated price-to-earnings (P/E) ratios, and the broker’s earnings forecasts for FY25 on those stocks were 5% to 10% below consensus.

The shares include JB Hi-Fi Ltd (ASX: JBH), Flight Centre Travel Group Ltd (ASX: FLT), and Premier Investments Limited (ASX: PMV), and in a new ratings update the broker has a sell rating on all of them.

The state of play in retail

The latest Westpac Consumer Sentiment data reveals persistently low consumer sentiment over the past two years that shows “few signs of lifting”, according to senior economist Matthew Hassan.

Hassan commented:

Indeed, outside of the deep recession of the early 1990s, this is easily the second most protracted period of deep consumer pessimism since we began surveying in the mid-1970s, with all other sentiment slumps lasting nine months or less.

Deng and Leigh said shoppers were “clearly increasingly value-focused” amid likely delays in rate cuts. (The broker recently changed its projected timeline for a rate cut from August to November.)

The latest retail figures from the Australian Bureau of Statistics (ABS) support this view. The data revealed the “weakest growth on record” outside the pandemic and the introduction of the GST.

Retail turnover rose by just 0.8% over the 12 months to 31 March, despite significant population growth.

Turnover fell by a seasonally adjusted 0.4% in March, following a 1% lift in January and a 0.2% rise in February.

ABS head of retail statistics Ben Dorber said consumers had pulled back on spending in March amid high cost-of-living pressures.

3 ASX retail shares to sell

Deng and Leigh commented that recent 3Q24 company results, channel checks, and the latest ABS retail data suggested Australian consumers were “increasingly price-conscious and selective about spending”.

In their recent note, Deng and Leigh re-rated several ASX retail shares.

Their recommendations included six shares to buy, seven with neutral ratings, and three to sell, as follows.

JB Hi-Fi shares

The JB Hi-Fi share price is $57.53, up 1.72% currently and up 5.7% in the year to date.

Goldman has a 12-month share price target of $50 on this popular ASX retail share.

Deng and Leigh downgraded JB Hi-Fi shares from a neutral to sell rating, commenting:

We cut FY24-26e EBIT by 3-4% and EPS by 3-5% given softer growth in the Electronics category as well as rising competition, particularly for JBH AU, most noticeably from Officeworks.

Our FY25e EBIT and EPS are ~6% below Factset consensus.

Premier Investments shares

The Premier Investments share price is $29.59, down 0.37% currently and 4.89% higher in the year to date.

Goldman has a 12-month share price target of $25.10 on the owner of Just Jeans and Peter Alexander.

Flight Centre shares

The Flight Centre share price is $20.58, up 0.68% currently and 0.64% higher in the year to date.

Goldman has a 12-month share price target of $18.30 on this ASX retail travel share.

The post Dump ’em! Top broker says sell these 3 ASX retail shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has recommended Flight Centre Travel Group, Jb Hi-Fi, and Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) closed up a stellar 1.4% on Tuesday 7 May.

This great run was fuelled by the Reserve Bank of Australia’s meeting on the day, which saw the central bank leave Australia’s official interest rate steady at 4.35%.

However, the minutes of the RBA’s meeting, released today, reveal that ASX 200 investors came closer than many expected to witnessing another rate hike as the inflation outlook remains highly uncertain.

The ASX 200 is down 0.2% in early afternoon trade today.

Here’s what we learned from the RBA’s inflation outlook and interest rate expectations.

ASX 200 investors dodged a rate rise bullet

It turns out the speculations of another potential 2024 interest rate increase from the RBA weren’t so far out of the ballpark after all.

And judging by the tone of the RBA board’s minutes, ASX 200 investors shouldn’t write off this possibility just yet.

In the meeting, chaired by Governor Michele Bullock, the RBA noted:

Raising the cash rate at this meeting could be appropriate if the board formed a view that the judgements underpinning the staff forecasts risked being overly optimistic about the forces that would drive down inflation, leaving the balance of risks tilted to the upside.

Among the bigger inflationary concerns that could lead to ASX 200 investors having to bear another rate hike is Australia’s tight labour market.

“Labour market conditions had eased by less than had been anticipated three months earlier,” the RBA said. “Conditions in the labour market appeared to be tighter than those consistent with full employment.”

The board also noted that while inflation had eased further in the March quarter “the pace of disinflation had slowed and the recent inflation data were stronger than had been expected in February”.

Indicating how close Australia was to another interest rate hike, the RBA said “Most of the data received since the previous meeting had been stronger than expected.”

According to the minutes:

Taken together, these data suggested that there may be somewhat less slack in the economy than previously assessed. Inflation in Australia had declined more slowly than anticipated. Conditions in the labour market had eased by less than expected over prior months and were tighter than those consistent with full employment.

In what was good news for the ASX 200 on the day, the final decision was to leave the cash rate unchanged.

At least, for now.

“Members agreed that it was important to convey that recent data and other information had signalled that the risks around inflation had risen somewhat,” the board highlighted.

Noting “the considerable uncertainty about the outlook for both inflation and the labour market”, the RBA’s board members “agreed that it was difficult either to rule in or rule out future changes in the cash rate target”.

The post The ASX 200 was almost hit by an RBA interest rate hike in May. Now what? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Star Entertainment Group Ltd (ASX: SGR) share price is taking a tumble today.

Shares in the S&P/ASX 200 Index (ASX: XJO) casino operator were down 10.1% in earlier trade at 48.5 cents. After some likely bargain hunting, shares have recouped much of those losses, currently trading for 52.5 cents apiece, down 2.8%.

For some context, the ASX 200 is down 0.2% at this same time.

This comes after another update on media speculations surrounding potential takeover discussions with Hard Rock International.

Hard Rock responds

As the Motley Fool reported yesterday, Star had confirmed media rumours saying it has received interest from “a number of external parties regarding potential transactions”.

Management noted that they were not yet in “substantive discussions”. But that didn’t stop the Star Entertainment share price from soaring after coming out of the morning trading halt, ending the day up 20.0%.

The big rally may have been driven by the rumours of Hard Rock’s potential interest in the stock.

Yesterday, The Australian Financial Review cited sources close to Star had indicated Hard Rock Hotels and Casinos was among those external parties potentially interested in acquiring the embattled casino operator.

Overnight, the United States-based global chain denied that in no uncertain terms.

According to Hard Rock:

Any misuse of the Hard Rock name in unauthorised business dealings is taken very seriously. We are currently investigating this matter and will pursue all necessary legal actions to protect our brand and reputation.

Star Entertainment released an update in response to the media speculation during trading hours yesterday.

“The Star confirms that it has not received a proposal directly from Hard Rock Hotels and Casinos (Hard Rock),” the company noted.

Star continued:

However, the company has received inbound interest from a number of other external parties regarding potential transactions including a consortium of investors which includes the entity Hard Rock Hotels & Resorts (Pacific), which The Star understands is a local partner of Hard Rock.

The nature of the interest to date has been confidential, unsolicited, preliminary and non-binding. At this stage, none of the approaches has resulted in substantive discussions.

To clarify its position following Hard Rock’s litigation threats, Star Entertainment followed up with another statement this morning:

The company today notes the statement issued by Hard Rock International which clarifies that Hard Rock International is not involved in, nor has it authorised, any discussions, activities or negotiations on its behalf in connection with a proposal for The Star.

Star Entertainment share price snapshot

The Star Entertainment share price is down 55% over the past full year. But shares in the ASX 200 casino operator look to have found support over the past months, with shares down just over 1% in 2024.

The post Star Entertainment share price dives 10% on Hard Rock update appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.